Fast Facts About the Tax Certiorari Process in New York City
The annual tax certiorari process can result in significant savings through reduced real estate taxes, so challenging the assessed value of your property should be an essential part of your building's financial plan each year.Here are 8 facts you need to know about New York City's Tax Certiorari process.
Tax certiorari attorneys work on a contingency basis and are paid only if they are able to reduce your tax bill. Therefore, it is in their best interest to get as much of a reduction as they can for your property.
New York City is one of very few jurisdictions where all real estate property is reassessed annually.
New York City also phases in all increases in real estate tax assessments over five years. Thus, there are two assessed valuations. The actual assessed valuation made public on January 15 of each year is the Department of Finance’s determination of the proper property value. The transitional (taxable) assessed valuation is derived from the phase in of any increases in the actual assessed valuation in each of the five prior years.
Department of Finance Assessment
The assessment set by the Department of Finance is presumed correct. The burden is on the applicant to prove by a preponderance of evidence that the assessment should be reduced or otherwise corrected. The assessment of a cooperative or condominium is unrelated to the market value on sales of the various apartments. Rather, each cooperative and condominium is assumed to operate as a rental property. The assessor looks for other rental apartment buildings that are deemed comparable, and imputes income, expenses and a capitalization rate to the cooperative or condominium to determine an appropriate assessment.
Tax Commission Hearing
The tax certiorari process involves two primary opportunities to generate reductions in the assessments. Each year, eligible properties have a hearing before the Tax Commission during which assessments for the current and one prior tax year can be adjusted.
If no settlement is reached, a petition is filed to begin civil litigation against the City of New York. Usually, after three or more years, negotiations ensue with the Law Department that may result in a reduction. Law Department negotiations can continue for many years and can result in settlements affecting five or more years.
A settlement usually consists of a cash refund as well as future savings in taxes. The refund arises from overpayment of the taxes that may occur for any reduction for the current year’s assessment as applied to payments already made for that year, and for any reductions for prior tax years. Because of the phase in of any increases in assessments for tax purposes, any reduction for the most recent five year period will result in tax savings for future years.
Buildings have until March 1 of each year to file a protest with the Tax Commission for the tax year that starts on July 1 of that year.
Click here to learn how significant saving can be achieved by protesting real estate tax assessments.